What is a good ACoS on Amazon?

C Cirometre team
Short answer

There is no universal “good” ACoS. The right target is the product’s margin before advertising: if your margin is 35%, the campaign earns while ACoS stays under 35% and loses money above it. That threshold is called break-even ACoS. ACoS only compares ad spend to ad sales, so it cannot see referral fees, FBA costs, returns or product cost — which is why it is not a profitability measure on its own.

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Photo: Jakub Żerdzicki · Unsplash

Why one target for the whole account is wrong

Accounts usually pick a number — 25%, 30% — and apply it everywhere. It is convenient and it is wrong for most of the catalogue, because products do not share a margin. A 45%-margin accessory and an 18%-margin appliance cannot have the same break-even.

Break-even ACoS, step by step

Take the product and strip out everything except advertising:

LineAmount
Sale price$29.99
Referral fee−$4.50
FBA fulfilment−$5.20
Returns and storage−$1.75
Cost of goods−$9.80
Profit before advertising$8.74

$8.74 ÷ $29.99 = 29.1%. That is the break-even ACoS for this product. Below it, every advertised sale adds profit. Above it, every advertised sale costs you money — while still looking like growth in the sales chart.

When ACoS looks fine and you are still losing

ACoS is a ratio of two advertising numbers. It is blind to everything else. Three situations where a healthy ACoS hides a loss:

  • The product’s margin is thin. 25% ACoS on a 20% margin product loses on every sale.
  • Returns are high. The return happens after the ad spend. ACoS is calculated on gross ad sales; the refund never reaches it.
  • Ad sales cannibalise organic. If the customer would have found you anyway, the ad spend bought nothing. TACoS is the measure that notices.

Checklist

  • Do you know the break-even ACoS per product, not per account?
  • Does your margin figure include returns and storage, not just fees?
  • Are you watching TACoS alongside ACoS?
  • When a product’s cost changes, does the break-even change with it?

Frequently asked questions

What is a good ACoS on Amazon?

There is no single number. The right target is the product’s own break-even ACoS, which equals the net margin left after every deduction other than advertising. A product with a 30% margin breaks even at 30% ACoS; 15% earns, 40% loses.

How do you calculate break-even ACoS?

It is net profit excluding advertising, divided by the sale price. Subtract referral fee, FBA, storage, returns and cost of goods; the remainder as a share of price is your break-even ACoS. It differs per product, which is why one account-wide ACoS target misleads.

What is the difference between ACoS and TACoS?

ACoS compares ad spend to the sales advertising produced. TACoS compares it to total sales including organic. A rising TACoS with a flat ACoS means advertising is buying sales you were getting anyway.

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